MIRA
INFORM REPORT
|
Report Date : |
10.11.2012 |
IDENTIFICATION DETAILS
|
Name : |
ANDHRA BANK |
|
|
|
|
Registered
Office : |
5-9-11, Dr. Pattabhi Bhavan, Saifabad, |
|
|
|
|
Country : |
|
|
|
|
|
Financials (as
on) : |
31.03.2012 |
|
|
|
|
Year of
Establishment : |
20.11.1923 |
|
|
|
|
Capital
Investment / Paid-up Capital : |
Rs.5595.804
Millions |
|
|
|
|
TAN No.: [Tax Deduction &
Collection Account No.] |
HYDA404005B/ HYDA05304F/ VPNA00972G |
|
|
|
|
Legal Form : |
Public Sector Bank. The Banks Shares are Listed on the Stock Exchange. |
|
|
|
|
Line of Business
: |
Subject is engaged in Banking Activities. |
|
|
|
|
No. of Employees
: |
1449 (Approximately) |
RATING & COMMENTS
|
MIRA’s Rating : |
Aa (75) |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
Maximum Credit Limit : |
USD 300000000 |
|
|
|
|
Status : |
Excellent |
|
|
|
|
Payment Behaviour : |
Regular |
|
|
|
|
Litigation : |
Clear |
|
|
|
|
Comments : |
Subject has commenced its operations during 1923. Government of India holds
58 percent stake in the subject. It has entered into a joint venture agreement with Bank of Baroda and
India Overseas Bank to set up a Bank in Malaysia. It is a well established and reputed Bank having excellent track. Liquidity position appears to be strong
and healthy. Trade relations are reported as praiseworthy. Business is active.
Payments terms re regular and as per commitments. The bank can be considered excellent for business dealings at usual
trade terms and conditions. |
NOTES:
Any query related to this report can be made
on e-mail: infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – June 30, 2012
|
Country Name |
Previous Rating (31.03.2012) |
Current Rating (30.06.2012) |
|
|
A1 |
A1 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
|
Restricted |
C2 |
|
Off-credit |
D |
INDIAN ECONOMIC OVERVIEW
India is developing into an open-market economy, yet traces
of its past autarkic policies remain. Economic liberalization, including
industrial deregulation, privatization of state-owned enterprises, and reduced
controls on foreign trade and investment, began in the early 1990s and has
served to accelerate the country's growth, which has averaged more than 7% per
year since 1997. India's diverse economy encompasses traditional village
farming, modern agriculture, handicrafts, a wide range of modern industries,
and a multitude of services. Slightly more than half of the work force is in
agriculture, but services are the major source of economic growth, accounting
for more than half of India's output, with only one-third of its labor force.
India has capitalized on its large educated English-speaking population to
become a major exporter of information technology services and software
workers. In 2010, the Indian economy rebounded robustly from the global
financial crisis - in large part because of strong domestic demand - and growth
exceeded 8% year-on-year in real terms. However, India's economic growth in
2011 slowed because of persistently high inflation and interest rates and
little progress on economic reforms. High international crude prices have
exacerbated the government's fuel subsidy expenditures contributing to a higher
fiscal deficit, and a worsening current account deficit. Little economic reform
took place in 2011 largely due to corruption scandals that have slowed legislative
work. India's medium-term growth outlook is positive due to a young population
and corresponding low dependency ratio, healthy savings and investment rates,
and increasing integration into the global economy. India has many long-term
challenges that it has not yet fully addressed, including widespread poverty,
inadequate physical and social infrastructure, limited non-agricultural
employment opportunities, scarce access to quality basic and higher education,
and accommodating rural-to-urban migration.
|
Source
: CIA |
EXTERNAL AGENCY RATING
|
Rating Agency Name |
CRISIL |
|
Rating |
Perpetual Tier I Bonds: AA+ |
|
Rating Explanation |
High degree of safety and very low credit
risk. |
|
Date |
21.03.2012 |
|
Rating Agency Name |
CRISIL |
|
Rating |
Upper Tier II Bonds: AA+ |
|
Rating Explanation |
High degree of safety and very low credit
risk. |
|
Date |
21.03.2012 |
RBI DEFAULTERS’ LIST STATUS
Subject’s name is not enlisted as a defaulter
in the publicly available RBI Defaulters’ list.
EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS
Subject’s name is not enlisted as a defaulter
in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of
31-03-2012.
LOCATIONS
|
Registered/ Head Office : |
5-9-11, Dr. Pattabhi Bhavan, Saifabad,
Hyderabad – 500 004, Andhra Pradesh, India |
|
Tel. No.: |
91-40-23230883/ 23252371/ 2388 |
|
Fax No.: |
91-40-23230883 |
|
E-Mail : |
|
|
Website : |
DIRECTORS
(AS ON 31.03.2012)
|
Name : |
Mr. B. A. Prabhakar |
|
Designation : |
Chairman and Managing Director |
|
|
|
|
Name : |
Mr. R. Ramachandran |
|
Designation : |
Chairman and Managing Director |
|
|
|
|
Name : |
Mr. A. A. Taj |
|
Designation : |
Executive Director |
|
|
|
|
Name : |
Mr. K. K. Misra |
|
Designation : |
Executive Director |
|
|
|
|
Name : |
Mr. Anil Girotra
|
|
Designation : |
Executive
Director |
|
|
|
|
Name : |
Mrs. Madhulika P Sukul |
|
Designation : |
Govt. of India Nominee Director |
|
|
|
|
Name : |
Mr. K. R. Ananda |
|
Designation : |
RBI Nominee Director |
|
|
|
|
Name : |
Mr. Pankaj Chaturvedi |
|
Designation : |
Part-time Non-Official Director |
|
|
|
|
Name : |
Mr. Manoranjan Das |
|
Designation : |
Representing
Workmen Employee Director |
|
|
|
|
Name : |
Mr. N. Venkata
Ramana Reddy |
|
Designation : |
Part-time
Non-Official Director |
|
|
|
|
Name : |
Mr. Shaibal
Gupta |
|
Designation : |
Part-time
Non-Official Director |
|
|
|
|
Name : |
Mr. Rajib Sekhar
Sahoo |
|
Designation : |
Part-time
Non-Official Director |
|
|
|
|
Name : |
Mr. N. Raja
Gopal Reddy |
|
Designation : |
Representing
Officer Employee Director |
|
|
|
|
Name : |
Mr. K Raghuraman |
|
Designation : |
Director elected
from amongst shareholders other than Central Government (Re-elected) |
|
|
|
|
Name : |
Mr. G. R.
Sundaravadivel |
|
Designation : |
Director elected
from amongst shareholders other than Director of United Bank of India and
Central Government |
|
|
|
|
Name : |
Mr. Nandlal L.
Sarda |
|
Designation : |
Director elected
from amongst shareholders other than at IIT, Powai, Mumbai. He is in the Central
Government |
|
|
|
|
Name : |
Mr. Prem Prakash
Pareek |
|
Designation : |
Director elected
from amongst shareholders other than
Central Government |
|
|
|
|
Name : |
Mr. V. H.
Ramakrishnan |
|
Designation : |
Director elected
from amongst shareholders other than Banking Central Government |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
(AS ON 30.09.2012)
|
Category of
Shareholder |
Total No. of Shares |
Total Shareholding as a % of Total No. of Shares |
|
|
|
|
|
(A) Shareholding
of Promoter and Promoter Group |
|
|
|
|
|
|
|
|
324580364 |
58.00 |
|
|
324580364 |
58.00 |
|
|
|
|
|
|
|
|
|
Total
shareholding of Promoter and Promoter Group (A) |
324580364 |
58.00 |
|
|
|
|
|
(B) Public
Shareholding |
|
|
|
|
|
|
|
|
3594304 |
0.64 |
|
|
28494128 |
5.09 |
|
|
5000 |
0.00 |
|
|
53661429 |
9.59 |
|
|
72094180 |
12.88 |
|
|
157849041 |
28.21 |
|
|
|
|
|
|
|
|
|
|
12817864 |
2.29 |
|
|
|
|
|
|
|
|
|
|
56502356 |
10.10 |
|
|
5702300 |
1.02 |
|
|
|
|
|
|
2128439 |
0.38 |
|
|
1031138 |
0.18 |
|
|
1073513 |
0.19 |
|
|
6088 |
0.00 |
|
|
3300 |
0.00 |
|
|
14400 |
0.00 |
|
|
77150959 |
13.79 |
|
|
|
|
|
Total Public
shareholding (B) |
235000000 |
42.00 |
|
|
|
|
|
Total (A)+(B) |
559580364 |
100.00 |
|
|
|
|
|
(C) Shares held
by Custodians and against which Depository Receipts have been issued |
|
|
|
|
-- |
0.00 |
|
|
-- |
0.00 |
|
|
-- |
0.00 |
|
|
|
|
|
Total
(A)+(B)+(C) |
559580364 |
0.00 |
(1)
Indian
Central
Government / State Government(s)
Individual
shareholders holding nominal share capital up to Rs.0.100 Million BUSINESS DETAILS
|
Line of Business : |
Subject is engaged in Banking Activities. |
GENERAL INFORMATION
|
No. of Employees : |
1449 (Approximately) |
|
|
|
|
Bankers : |
Reserve Bank of India |
|
|
|
|
Banking
Relations : |
-- |
|
|
|
|
Auditors : |
|
|
Name : |
· Raju and Prasad Chartered Accountants · R Subramanian and Company Chartered Accountants · Nataraja Iyer and Company Chartered Accountants · Patro and Company Chartered Accountants · Umamaheswara Rao and Company Chartered Accountants · C R Sagdeo and Company Chartered Accountants |
|
|
|
|
Subsidiary : |
· Andhra Bank Financial Services Limited |
|
|
|
|
Associates : |
· Chaitanya Godavari Grameena Bank · Rushikuly Gramy Bank |
|
|
|
|
Joint Ventures : |
· India First Life Insurance Company Limited · India International Bank (Malaysia) Bhd. |
CAPITAL STRUCTURE
(AS ON 31.03.2012)
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
3000000000 |
Equity Shares |
Rs.10/- each |
Rs.30000.000 Millions |
|
|
|
|
|
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
559580364 |
Equity Shares |
Rs.10/- each |
Rs.5595.804
Millions |
|
|
|
|
|
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE SHEET
|
SOURCES OF FUNDS |
31.03.2012 |
31.03.2011 |
31.03.2010 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
Share Capital |
5595.804 |
5595.804 |
4850.000 |
|
Reserves &
Surplus |
69198.103 |
59328.358 |
39250.435 |
|
Deposits |
1058512.181 |
921562.816 |
776882.076 |
|
Borrowings |
82405.572 |
76397.408 |
58524.426 |
|
Other Liabilities
& Provisions |
33930.709 |
26122.809 |
23917.086 |
|
|
|
|
|
TOTAL
|
1249642.369 |
1089007.195 |
903424.023 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
Cash &
Balances with RBI |
55638.870 |
71844.052 |
66986.980 |
|
Balances with
Banks & money at Call & Short notice |
30817.007 |
32745.455 |
44689.587 |
|
Investments |
296289.041 |
242039.993 |
208809.986 |
|
Advances |
836418.274 |
714353.582 |
561135.072 |
|
Fixed Assets |
3025.531 |
3175.002 |
3556.567 |
|
Other Assets |
27453.646 |
24849.111 |
18245.831 |
|
|
|
|
|
TOTAL
|
1249642.369 |
1089007.195 |
903424.023 |
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2012 |
31.03.2011 |
31.03.2010 |
|
|
Income |
|
|
|
|
|
Interest Earned |
113387.283 |
82912.769 |
63728.657 |
|
|
Other Income |
8599.296 |
8969.578 |
9646.200 |
|
|
TOTAL |
121986.579 |
91882.347 |
73374.857 |
|
|
|
|
|
|
|
|
Expenditure |
|
|
|
|
|
Interest expended |
75794.068 |
50703.074 |
41781.287 |
|
|
Operating Expenses |
18042.492 |
17048.640 |
13495.350 |
|
|
Provisions & Contingencies |
14703.304 |
11459.908 |
7639.738 |
|
|
TOTAL |
108539.864 |
79211.622 |
62916.375 |
|
|
|
|
|
|
|
|
Net Profit for the year |
13446.715 |
12670.725 |
10458.482 |
|
|
|
|
|
|
|
|
Profit Brought Forward |
2927.093 |
2006.560 |
1529.440 |
|
|
|
|
|
|
|
|
Appropriations |
|
|
|
|
|
Transfer to Statutory Reserves |
3361.679 |
3169.222 |
2620.000 |
|
|
Transfer to Capital Reserve |
44.500 |
44.000 |
933.600 |
|
|
Transfer to Revenue and Other Reserve |
6750.000 |
4000.000 |
3000.000 |
|
|
Transfer to Special Reserve |
1650.000 |
960.000 |
600.000 |
|
|
Proposed Dividend |
3077.692 |
3077.692 |
2425.000 |
|
|
Tax on Dividend |
499.278 |
499.278 |
402.762 |
|
|
Balance Carried over to balance
sheet |
990.659 |
2927.093 |
2006.560 |
|
|
|
|
|
|
|
|
TOTAL |
16373.808 |
14677.285 |
11987.922 |
|
|
|
|
|
|
|
|
Earning per shares |
24.03 |
26.05 |
21.56 |
QUARTERLY RESULTS
|
PARTICULARS |
30.06.2012 |
30.09.2012 |
|
Type |
1st
Quarter |
2nd
Quarter |
|
Interest Earned |
31214.900 |
31981.600 |
|
Income On Investments |
5790.800 |
6022.700 |
|
Interest On Balances With Rbi Other Inter Bank Funds |
221.100 |
273.400 |
|
Interest / Discount On Advances / Bills |
25203.000 |
25509.000 |
|
Others |
0.000 |
176.500 |
|
Other Income |
2357.300 |
2194.600 |
|
Total Income |
33572.200 |
34176.200 |
|
Interest Expended |
21830.100 |
23044.100 |
|
Operating Expenses |
4708.300 |
4751.000 |
|
Total Expenditure |
4708.300 |
4751.000 |
|
Operating Profit Before Provisions and Contingencies |
7033.800 |
6381.100 |
|
Exceptional Items |
0.000 |
0.000 |
|
Provisions and contingencies |
2065.500 |
1394.800 |
|
Profit Before Tax |
4968.300 |
4986.300 |
|
Tax |
1350.000 |
1730.000 |
|
Profit After Tax |
3618.300 |
3256.300 |
|
+/- Extraordinary Items |
0.000 |
0.000 |
|
+/- Prior period items |
0.000 |
0.000 |
|
Net Profit |
3618.300 |
3256.300 |
LOCAL AGENCY FURTHER INFORMATION
|
Sr. No. |
Check List by Info Agents |
Available in Report (Yes / No) |
|
1] |
Year of Establishment |
Yes |
|
2] |
Locality of the firm |
Yes |
|
3] |
Constitutions of the firm |
Yes |
|
4] |
Premises details |
No |
|
5] |
Type of Business |
Yes |
|
6] |
Line of Business |
Yes |
|
7] |
Promoter's background |
No |
|
8] |
No. of employees |
Yes |
|
9] |
Name of person contacted |
No |
|
10] |
Designation of contact person |
No |
|
11] |
Turnover of firm for last three years |
Yes |
|
12] |
Profitability for last three years |
Yes |
|
13] |
Reasons for variation <> 20% |
----- |
|
14] |
Estimation for coming financial year |
No |
|
15] |
Capital in the business |
Yes |
|
16] |
Details of sister concerns |
No |
|
17] |
Major suppliers |
No |
|
18] |
Major customers |
No |
|
19] |
Payments terms |
No |
|
20] |
Export / Import details (if applicable) |
No |
|
21] |
Market information |
----- |
|
22] |
Litigations that the firm / promoter
involved in |
----- |
|
23] |
Banking Details |
Yes |
|
24] |
Banking facility details |
Yes |
|
25] |
Conduct of the banking account |
----- |
|
26] |
Buyer visit details |
----- |
|
27] |
Financials, if provided |
Yes |
|
28] |
Incorporation details, if applicable |
Yes |
|
29] |
Last accounts filed at ROC |
Yes |
|
30] |
Major Shareholders, if available |
No |
|
31] |
Date of Birth of
Proprietor/Partner/Director, if available |
No |
|
32] |
PAN of Proprietor/Partner/Director, if
available |
No |
|
33] |
Voter ID No of Proprietor/Partner/Director,
if available |
No |
|
34] |
External Agency Rating, if available |
Yes |
PROFITABILITY
The Bank continued
to grow well showing a good performance during the Financial Year 2011-12. Profitability
Parameters saw satisfactory growth. Total Income increased by 32.8% from
Rs.91880.000 Millions to Rs.121990.000 Millions while Non- Interest Income
(excluding Profit on Sale of Investments) stood at Rs.7390.000 Millions
compared to Rs.7560.000 Millions in the previous year. Operating Profit of the
Bank increased to Rs.28150.000 Millions from Rs.24130.000 Millions, registering
an increase of 16.7%. Net Profit increased by 6.1% to Rs.13450.000 Millions in
2011-12 from Rs.12670.000 Millions in the previous year.
The total Interest
Income has shown a robust growth of 36.8% from Rs.82912.800 Millions as on
31.3.2011 to Rs.113387.300 Millions as on 31.3.2012. Of this, Interest Income
from Advances grew by 38.7% from Rs.66891.700 Millions as on 31.3.2011 to
Rs.92782.400 Millions as on 31.3.2012. Interest Income from investments
increased by 28.2% from Rs.15393.900 Millions and stood at Rs.19735.300
Millions for the financial year ended March, 2012.
The focus on
credit expansion, high yielding advances in particular and the consequent
increase in interest income from advances has contributed for the increase in
Net Interest Income by 16.7 %.
Of the total Non
Interest Income, Fee Based Income stood at Rs.1019.300 Millions for the financial
year ended March 2012 against Rs.961.900 Millions in the previous year.
Total Expenses
were Rs.93836.600 Millions as on 31.3.2012 as against Rs.67751.700 Millions as
on 31.3.2011. Of this, Operating Expenses stood at Rs.18042.500 Millions (an increase
of 5.8%). Establishment Expenditure as a percentage of Total Expenditure stood
at 12.25% for the year ended 31.3.2012.
MANAGEMENT’S
DISCUSSION AND ANALYSIS
MACRO ECONOMIC DEVELOPMENTS
Global
uncertainties and domestic cyclical and structural factors lowered the growth
of Indian economy to below seven per cent in 2011-12 as compared to the growth
rate of 8.4 per cent for 2010-11. As per Advance Estimates of Central
Statistics Office for 2011-12, Agriculture is estimated to grow by 2.5%,
industry by 3.6% and services by 8.8%. All three sectors are contributing to
the consolidation of growth. More importantly, the economy has shown remarkable
resilience to both external and domestic shocks.
The growth
slowdown has been driven by a sharp fall in investment, some moderation in
private consumption and
a fall in net
external demand. Decline in saving and investment rates constitute a concern
for long-term growth performance.
The Index of
Industrial Production (IIP) figures were not very encouraging through most of
the Financial Year 2011-12, only with a slight recovery in the month of
November’11.
However, the
latest release by MOSPI shows that IIP growth (Y-o-Y) has slipped down during
the last quarter, much below the market
expectations.
Generalised price
pressures softened as growth deceleration eased demand. This is also evident in
a significant decline in core inflation during Q4 of 2011-12. Primary food
inflation reversed after a sharp decline as transitory effects waned. Energy
prices are likely to remain a significant source of inflation ahead, as
suppressed domestic prices of oil, coal and electricity prices are adjusted
upwards. Wage price pressures in both rural and urban areas are yet to soften.
Consumer price inflation also remains high. Inflation expectations moderated in
Q4 of 2012-13 but remain high. With significant upside risks to inflation,
monetary policy needs to keep them anchored, while shifting the balance of
policy to arrest the deceleration in growth momentum.
MONETARY AND LIQUIDITY
CONDITIONS
Though inflation
remains high, declining inflation and growth rates motivated the Reserve Bank
to shift to a neutral monetary policy stance since December 2011, leaving
policy rates unchanged.
The liquidity deficit
has turned large since November 2011 due to both structural and frictional
factors, mainly forex operations and a build up of Government’s cash balances,
respectively. Liquidity deficit eased in April 2012 due to large government
spending.
The Reserve Bank
injected durable primary liquidity of over Rs.2 trillion through open market
operations (OMOs) purchase and a 125 basis point reduction in Cash Reserve
Ratio (CRR) to address the structural liquidity deficit.
Reserve money
growth decelerated in Q4 of 2011-12, reflecting the CRR cuts. However, the pace
of adjusted reserve money creation has recently picked up. Broad money growth
fell below the indicative trajectory of the Reserve Bank for end-March 2012,
reflecting a deceleration in deposit growth.
BOP AND EXTERNAL
SECTOR
The Balance of
Payments (BoP) came under significant stress in Q3 of 2011-12. Net capital
inflows fell short of the current account deficit (CAD), resulting in a
substantial drawdown of Reserves. A wider current account deficit, rising
external debt, weakening net international investment position (NIIP) and
deteriorating vulnerability indicators underscored the need for greater
prudence in external sector and demand management policies.
India’s trade
deficit hit a record high of USD 184.9 bn, i.e., 9.9% of GDP for the fiscal
year that ended in March 2012 (as against previous year’s deficit of USD 118.7
bn or 7.1% of GDP) owing to subdued export growth (21% growth to USD 303.7 bn)
coupled with high imports (32.1% growth to USD 488.6 bn).
Export growth may
weaken despite continued trade diversification as growth in emerging and
developing economies slows down. The imports bill will remain high due to
inadequate pass through of higher global oil prices and demand for precious
metals, viz., gold and silver is curbed. While capital inflows have improved in
Q4 of 2011-12, global uncertainties and persistently high oil prices aggravate
downside risks to the external outlook. Dependence on debt-creating capital
inflows needs to be reduced by encouraging renewed equity flows through
accelerated reforms to attract FDI.
EQUITY MARKET
Despite the
slowdown in domestic growth and the recent oil price increase, Indian equity
markets stayed upbeat in Q4 of 2011-12, conditioned by the revival in global
markets, the surge in FII inflows and the decline in domestic inflation.
Reflecting the
prevailing structural liquidity deficit coupled with outflows for advance tax
payment by companies, money market rates remained elevated. Taking cues from favourable
international developments and improved financial conditions, Indian Financial
Markets revived in Q4 of 2011-12. The revival, however, has been primarily
liquidity driven and expectations led. For recovery to be sustained,
macroeconomic fundamentals need to improve. Global liquidity and attractive
valuations have driven a 15-17% rally in the Indian stock market from the start
of 2012. BSE Sensex lost 12.5% and NSE Nifty lost 11.2% during 2011-12.
DEBT MARKET
Tight liquidity
conditions saw money market rates firm up. G-sec yields also firmed up
post-budget in response to the large market borrowing programme. Stress in
global financial markets eased significantly during Q1 of 2012 after the
European Commercial Bank made a large liquidity injection. Going forward, there
are risks of disruptive movements from euro area and monetisation of
commodities, especially oil, in the global markets. The yields on government
bonds fell for most part of the 4th quarter, although the trend
reversed following the budget announcements of higher borrowing in 2012-13.
Policy measures taken by the Reserve Bank have reduced volatility in the
currency markets. For the next financial year, Govt. has announced gross
borrowing of Rs.5.690 trillion in the union budget, which is 5.10% of the GDP.
FOREIGN EXCHANGE
MARKET
Global market
sentiments have improved following policy interventions in the euro area and
positive data from the US. The recent firming up of growth fundamentals in the US
coupled with policy measures in the euro area have helped abate fears of a
double dip recession in the advanced economies (AEs). This has helped stabilise
the troubled global financial markets and economy. Nevertheless, signs of a
mild recession in the euro area, slowdown of growth in emerging and developing
economies (EDEs) including China and India and surging crude oil prices bring
to the fore risks to recovery in global growth and inflation. High liquidity
from the extended easy monetary policy regimes globally has associated risks
for capital flows to the EDEs.
Nevertheless, the
global economy is unlikely to lapse into another recession. The above factors
coupled with better than expected recovery in the US growth have temporarily
helped reduce the stress in global financial markets and could have channelled
FII flows into Emerging Developing Economies in search of higher yields. Rupee
depreciated from 44.65 as on 31.03.2011 to 51.16 as on 31.03.2012 per US $,
owing to higher crude oil prices due to geo-political factors and increased
dollar demand.
MEASURES ANNOUNCED
BY RBI AND GOVERNMENT OF INDIA
Fiscal policy has
a key role to play in speeding up public investment to crowd in private
investment while ensuring fiscal consolidation. Growth is likely to improve
moderately in 2012-13. While inflation has moderated, risks to inflation are
still on the upside. Accordingly, monetary policy needs to support growth
without inflation and external imbalances by excessively fuelling demand.
Inflation is likely to remain sticky at about current level during the year
with the probability of further significant moderation being small.
Revival in the
industrial sector hinges on the impetus to ease supply-side constraints,
especially in the energy and mineral deficits. Government initiatives to revive
the power sector would be helpful in reviving the growth momentum. Increased
capital outlays in the latest budget and brisk pace of tendering of road
projects suggest some improvement in investment in latter part of 2012-13.
Commitment to cap subsidies to 2 per cent of GDP is a positive step. Upside
risks stem if phasing-in of flexible pricing of administered petroleum products
is delayed. Under-recoveries would then exceed those in 2011-12 causing a large
fiscal slippage. This poses challenges for aggregate demand management during
2012-13.
Generalised price
pressures softened as growth deceleration eased demand. This is also evident in
a significant decline in core inflation during Q4 of 2011-12. The pricing power
of companies has waned with moderation in demand. However, the path of
inflation in 2012-13 could remain sticky around current levels due to high oil
prices, large suppressed inflation, exchange rate pass-through, impact of
freight and tax hikes, wage pressure and structural impediments to supply
response. Inflation expectations moderated in Q4 of 2012-13 but remain high.
With significant upside risks to inflation, monetary policy needs to keep them
anchored, while shifting the balance of policy to arrest the deceleration in
growth momentum.
TRENDS IN BANKING
INDUSTRY
Growth in
Aggregate Deposits in 2011-12 has been lower than the corresponding period of
the previous year. While the year-on-year growth in Aggregate Deposits was 13.4
per cent during 2011-12, it was 15.9 percent during 2010- 11. Advances of Banks
have also shown a decreasing trend during 2011-12. Growth in Bank Credit
extended by ASCBs stood at 17.0 percent as on 23rd March 2012 as compared to
21.5 percent in the previous year. On the other hand, Credit-Deposit Ratio has
increased from 75.68% as on 25.03.2011 to 78.11% as on 23.03.2012.
Term deposits
recorded robust growth during calendar year 2011 mainly reflecting substitution
from the other components of monetary aggregates and small savings as the
increase in deposit rates by Banks incentivised the holdings of
interest-bearing deposits. During Q4 of 2011-12, however, term deposit growth
decelerated, mainly reflecting the dominance of the base effect and tight
liquidity conditions. Consequently, Banks increased their recourse to
non-deposit sources, such as borrowings by way of debt instruments and LAF
during 2011-12 compared with the previous year.
The divergence
between credit and the deposit growth rates had narrowed during the first three
quarters of 2011-12. The sharper deceleration in deposit growth during Q4 of
2011-12 and turnaround in credit growth during March 2012, however, caused the
divergence to increase. As deposit growth moderated, commercial banks’ recourse
to non deposit sources of finance (viz., borrowings) increased. During
Q4 of 2011-12, deposit rates of SCBs remained mostly unchanged from their peak
levels attained in H1 of 2011-12. Lending rates marginally notched up and seem
to have plateaued in H2 of 2011-12 in line with the peaking of the policy rate
cycle. Despite tight liquidity conditions, successive policy rate hikes and
high cost of funds for Banks, the base rate remained sticky on account of the
slowdown in non-food credit growth during H2 of 2011-12.
PERFORMANCE
HIGHLIGHTS OF THE BANK
BUSINESS
During the
financial year 2011-12, Andhra Bank’s Business increased to Rs.1905350.000
Millions as on 31.3.2012 from Rs.1643100.000 Millions as on 31.03.2011,
recording an annual growth rate of 16.0%.
BUSINESS REVIEW
The Total Business
(Total Deposits plus Gross Bank Credit) of the Bank registered a growth rate of
16.0%, up from Rs.1643100.000 Millions as on 31.3.2011 to Rs.1905350.000
Millions as on 31.3.2012.
STRATEGIC
INVESTMENTS
JOINT VENTURE
INSURANCE
The Bank is having
Joint Venture in Insurance with Bank of Baroda and Legal and General Plc of UK
christened “India First Life Insurance Company Limited”. The Bank’s stake in
the venture is 30% while Bank of Baroda holds 44% and Legal and General Plc
holds 26% stake. Both the Banks have commenced sale of insurance policies
through their Branch outlets. Bank’s investment in the life insurance venture
is Rs.1425.000 Millions.
BANKING SUBSIDIARY
IN MALAYSIA
The Bank along
with Bank of Baroda and Indian Overseas Bank, has entered into a tie up for
setting up a Banking Subsidiary in Malaysia. The Bank’s stake in the Venture is
25%, amounting to RM 77.50 Million (approximately ` 1298.200 Millions), in a
total subscribed Capital of RM 310 Million (approximately Rs.5192.500 Millions
@ 1 RM = Rs.167.500 Millions). They have subscribed to 585025 shares of RM 10
each amounting RM 5,850,250 (Rs.92.900 Millions).
The joint venture
has been incorporated on 13.08.2010 in the name of India International Bank
(Malaysia) BHD and is in the process of commencing operations. The Bank has
issued necessary Letter of Undertaking / Letter of Comfort favoring Bank Negara
Malaysia forming part of the application for license.
The joint venture
is the first of its kind in Malaysia and is expected to cater to the needs of
the Indian Diaspora there. Eight percent of the population of Malaysia, which
is approximately 2.1 million are Persons of Indian Origin. The joint venture is
very much beneficial considering that their bilateral trade with Malaysia is
rapidly growing and stands at approximately USD 10 billion. The commercial
operations are likely to commence soon.
UNITED STOCK
EXCHANGE OF INDIA LIMITED
United Stock Exchange
of India Limited is promoted by a consortium of Banks, of which the Bank is
also a partner. The other major Banks are Canara Bank, Bank of Baroda,
Allahabad Bank, Bank of India, Indian Overseas Bank and Oriental Bank of
Commerce. The Company has tied up with Bombay Stock Exchange which is providing
the trading platform and clearing services for the currency and interest rate
derivate products. The Bank holds 2.39% stake in the Company.
MULTI COMMODITY
EXCHANGE OF INDIA LIMITED
Associated with one
of the major commodity exchanges, the Bank has a tie up with the Multi
Commodity Exchange (MCX-SX) Limited. The Exchange commenced operations during
the financial year 2004-05. The Bank has an Equity stake of 4.6% in the
Exchange.
TREASURY AND FOREX
BUSINESS
The Bank is an
‘Authorised Dealer’, to deal in foreign exchange business through 46 designated
B category Branches of the Bank. The Bank has speed remittance arrangements
with Five Exchange Houses.
Systems have been
put in place for management of country risk, exchange risk and other foreign
exchange risks. The country risk exposures for single country risk limit and
aggregate risk limits for the group of countries under each risk category are
fixed and are being monitored on daily basis.
During the year
2011-12, the Bank recorded a merchant turnover of Rs.245690.900 Millions in
Forex. The Bank achieved Inter-Bank turnover of Rs.4383380.000 Millions as on
31.03.2012 compared to Rs.4344020.000 Millions as on 31.03.2011.
CREDIT CARD
BUSINESS
The Bank issued
8,133 new credit cards in the Financial Year 2011-12, including 2,916 upgrades.
The total outstanding Credit Card dues as on 31.03.2012 amounted to Rs.954.600
Millions. The Bank also issued around 40,830 prepaid Cards.
The Merchant
Business turnover is Rs.7510.000 Millions, with 341 Merchants enrolled.
Reward Points on
credit card merchant spend, a long time demand of the card holder is now
fulfilled. The unique feature is automatic redeeming on accumulation of 500
points with cash back to the card accounts.
The Branch Heads
are now delegated with the power to sanction credit cards up to a limit of
Rs.0.100 Million for customers. The Zonal Offices have been delegated with the
power to sanction credit cards to non-customers and customers with less than 6
months of account operation up to a limit of Rs.0.100 Million.
In order to create
competitive environment, Incentive Programme for mobilization of cards by
Branches and Zones has been introduced. This also creates an avenue of Non
Interest Income to the Branches for sanctioning cards.
NEW PRODUCTS AND
SERVICES INTRODUCED
Gift Cards
Gift Cards in
flexi denomination from Rs.250 to Rs.50,000 with built in security unique
features introduced.
International
Travel Cards
International
Travel Cards in USD with attractive features like PIN enabled at POS, Stand-in
Card with Locking facility when the card is not in use introduced.
Health Card
A co-branded
Health Card along with M/s India First Life Insurance Company for facilitating
Health Insurance claim settlement introduced.
Prepaid Cards
Prepaid cards
provided to Government of Andhra Pradesh for disbursing the pension payment to
the ART patients introduced.
MERCHANT BANKING
SERVICES
The Bank acted as
a ‘Paying Banker’ for payment of dividend warrants of three companies. The
Bank’s Shareholders’ and Investors’ Grievance Cell received 21 complaints and
7016 requests during the Financial Year 2011-12, and all the complaints and
requests were redressed by the Bank. The Share Transfer Committee of the Bank
met three times during the year and confirmed 1740 share transfers totaling to
8,29,800 shares.
The Bank tied up
with M/s TATA AIG General Insurance Company Limited towards Corporate Guard for
Directors
and Officers for
an amount of Rs.500.000 Millions for a period of one year with effect from
04.11.2011. The Bank has an agency agreement with Stock Holding Corporation of
India Limited to accept the physical applications for Infrastructure Bonds and
other Initial Public Offers of the companies from the general public through
the designated Branches.
Three Directors
from amongst the Shareholders of the Bank have been elected unanimously and
they assumed charge with effect from 14.3.2012.
OUTLOOK FOR 2012-13
The advance
estimate of the GDP growth of 6.9 per cent for 2011-12 by the Central
Statistics Office (CSO) is close to the Reserve Bank’s baseline projection of
7.0 per cent. Going forward into 2012-13, assuming a normal monsoon, agricultural
growth could stay close to the trend level. Industry is expected to perform
better than in last year as leading indicators of industry suggest a turnaround
in IIP growth. The global outlook also looks slightly better than expected
earlier. Overall, the domestic growth outlook for 2012-13 looks a little better
than in 2011-12. Accordingly, the baseline GDP growth for 2012-13 is projected
at 7.3 per cent.
Consistent with
growth and inflation projections, M3 growth for 2012-13, for policy purposes,
is projected by RBI at 15 percent. Consequently, aggregate deposits of SCBs are
projected to grow by 16 per cent. Keeping in view the need to balance the
resource requirements of the private sector and the public sector, growth in
non-food credit of SCBs is projected at 17 per cent by the RBI.
The domestic
demand-supply balance, the global trends in commodity prices and the likely
demand scenario, the baseline projection for WPI inflation for March 2013 is
placed at 6.5 per cent. Inflation is expected to remain range bound during the
year.
After raising the
policy rate by 375 basis points during March 2010- October 2011 to contain
inflation and anchor inflation expectations, the Reserve Bank paused in its
mid-quarter review (MQR) of December 2011. Subsequent growth inflation dynamics
prompted the Reserve Bank to indicate that no further tightening was required
and that future actions would be towards lowering the rates.
The policy actions
taken by RBI during the year were expected to:
· Stabilise growth around its current post-crisis trend;
· Contain risks of inflation and inflation expectations resurging;
· Enhance the liquidity cushion available to the system.
Against this
backdrop, the stance of monetary policy of RBI in future is intended to:
· Adjust policy rates to levels consistent with the current growth moderation.
· Guard against risks of demand-led inflationary pressures re-emerging.
· Provide a greater liquidity cushion to the financial system.
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners, controlling
shareholders or senior officers as terrorist or terrorist organization or whom
notice had been received that all financial transactions involving their assets
have been blocked or convicted, found guiltyor against whom a judgement or
order had been entered in a proceedings for violating money-laundering,
anti-corruption or bribery or international economic or anti-terrorism sanction
laws or whose assets were seized, blocked, frozen or ordered forfeited for
violation of money laundering or international anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper payments
to government officials for engaging in prohibited transactions or with
designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority for
any financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.54.25 |
|
|
1 |
Rs.87.00 |
|
Euro |
1 |
Rs.69.83 |
INFORMATION DETAILS
|
Report Prepared
by : |
NIT |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
9 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
8 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
9 |
|
--RESERVES |
1~10 |
9 |
|
--CREDIT LINES |
1~10 |
9 |
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
75 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this report.
The assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General unfavourable
factors will not cause fatal effect. Satisfactory capability for payment of
interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with full
security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
- |
NB |
New Business |
- |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.